I agree with the “Depends” crowd- primarily as we spend significantly more on vacations than just about anyone else above. We like to travel and prioritize it above just about everything else- our car is 10 years old, most of our furniture is Ikea or its competition. But we did a trip to the Florida Keys over Christmas and a two and a half week trip to Italy and France in February… California is next weekend. A couple of backpacking and camping trips this summer. And then the Caribbean or South America for Christmas. Now other than airfare, museums, shows, and an occasional nice dinner, we are extremely frugal while traveling so that forces us to find the true local restaurants and other cultural experiences. But we are pretty proud of the fact that our 8 year old has already visited 10 foreign countries, 5 Canadian Provinces, and 35 U.S. states (no layovers counted, of course).
With our family of four, I would guess that we spend closer to 15% of our salary on travel every year. We work so that we can travel!
It can also depend on how secure you feel your income is. If you have a very stable job and you are very confident that you will not lose it anytime soon or if you do lose it, finding a new job that pays the same will be very easy, it’s easy to spend a lot of money on a vacation knowing that you’ll have plenty of time to build up your savings again or pay off the debt (if you charged it). If you can smell layoffs in the air and you have a very senior and specialized job, even a person making $150,000 might be hesitant to spend $5000 lest they get laid off tomorrow and go into foreclosure before they find a new job.
One other thing I wanted to mention is that sometimes money isn’t the determining factor. In my current situation I could afford to spend a lot more on vacations than I currently do. But I simply can’t take that much time off work. I have a certain amount of paid time off per year, and much of that is already commited to family obligations. So I can maybe take one real vacation per year.
5% of income would be at the high end of what we pay for the Big Annual Vacation, but not outrageous. We definitely make some of our other financial decisions based on freeing up enough money to do that.
Basing vacation expense on percentage of salary, gross or net, is meaningless. If my set expenses match or exceed my net salary, then spending any percentage for a vacation is impossible. Vacation expenses come from net disposable income, and as such should be considered as a percentage of that. Net salary less fixed expenses equals gross disposable income. Next take out necessities/priorities such as food, utilities, clothing, transportation, education, job expenses, insurances, etc. What you have left is net disposable income. How you spend that depends entirely on you.
Exactly. I truly can’t understand the OP’s question. If vacationing is very important to you, spend 40% of your income on it. If you’d rather stay home, spend 0%.
Would the OP ask what percentage of one’s income it is “permissible” to spend on clothes? On one’s car? On eating out? On furnitures? Or what part of the income permissible for furnitures can be spent on the bed?
It’s purely a matter of individual priorities and preferences. This question leaves me puzzled.
